Bilateral investment treaties: Consequences on human rights and labor protection and determinants of ratification

This dissertation explores the domestic ratification process of bilateral investment treaties (BITs), and how these treaties and the asymmetric rights afforded by these treaties to investors impact human rights conditions and labor practices in developing countries. Chapter 2 investigates the domestic ratification process of BITs. It is puzzling that signed BITs take a long time to get ratified in some countries while they are ratified promptly in others. I model domestic ratification as a dynamic process of updating the costs and benefits of BITs after the signature. I argue that states update their assessment of the costs of BITs after signing by observing BIT claims against themselves as well as peer countries. Those claims delay ratification of BITs. In addition, host states are more likely to ratify BITs if ratification activity among their economic competitors is intense. Rapid ratification rates in countries that are economic competitors has the potential to increase fears of missed investment opportunities due to investment diversion, make domestic groups lean more favorably towards ratification and thus shorten the time between signing and ratifying BITs. Using all signed BITs as of 2007 and a BIT-year framework that allows to capture changing conditions after the signing stage, I find strong evidence for the arguments though the impact of BIT claims against states themselves is relatively weak, among others.;Chapter 3 systematically theorizes and rigorously tests the effect of BITs on human rights practices of signatory countries. I argue that BITs have the potential to worsen human rights practices because they lock in initial conditions attractive to investors, both retrospectively and into the future. These conditions may include low standards for environmental protection or labor rights and tied hands with respect to provision of welfare benefits, basic infrastructure, investment in environmentally friendly technologies or land reform. The combined lock-in and constraining effects of BITs are sources of popular grievance and dissent in states that host foreign investment. Repression and human rights violations are key responses of states to the manifested or just anticipated protest and dissent that can result from such grievances. Furthermore, I argue that democracies have higher accountability and a lower threat perception for dissent, mitigating the negative effect of BITs. Using data on 113 developing countries between 1981 to 2009, I find support for my hypotheses.;The last chapter examines the impact of BITs on collective labor rights that captures the freedom of association and collective bargaining rights and differentiates labor laws from the labor practices on the ground. I argue that BITs have little impact on collective labor laws while they worsen labor practices and widen the gap between labor laws and practices. Since foreign investors prefer to maintain the status quo level of regulations in capital-hosting states, BITs tend to stabilize labor laws. However, BITs are able to lock in initial low labor standards that are attractive to foreign investors, which may be a potential source of labor grievance and labor unrest. Also multinational corporations are found to be inviting targets for labor unrest. Given that all this anticipated or manifested labor unrest is likely to be challenged by foreign investors under stringent investment protective treaty clauses, host governments are forced to take measures to undermine the collective action capability of domestic labor groups, and reduce the risk of labor unrest. I argue that host governments may choose to undercut collective labor practices, resulting in a worsening of labor practices and a larger gap between labor laws and practices. Evidence from 120 developing countries from 1985 to 2002 supports my hypotheses.